A lettings trade body says a major house builder has blamed, in part, recent tax...

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One of the government’s three approved official redress providers says companies operating in the Rent-to-Rent sector should be obliged to join a redress scheme.

The Conservative Party conference last month heard a pledge by Communities Secretary Sajid Javid that all landlords would ultimately be obliged to join a redress scheme; now the Property Redress Scheme wants a start with the Rent-to-Rent niche.

Rent-to-Rent is when a company leases the property from the landlord and then lets it out, possibly on a room-by-room basis, having promised a guaranteed rent to the owner. The company also manages the property on a day to day basis.

However, the Rent to Rent model does not fit the traditional definition of lettings or property management work, meaning there is a question as to whether Rent to Rent companies currently have to be signed up to a redress scheme by law.

If all other parties involved in the lettings process are to be signed up to a redress scheme, then Sean Hooker, Head of Redress for the Property Redress Scheme, believes Rent to Rent firms should also be included as part of the legislation.

“R2R companies market themselves as taking away the hassle of being a landlord. However, these are complex legal arrangements. The R2R effectively becomes the tenant and the person living in the property a sub tenant” says Hooker.

“Landlords are attracted by a guaranteed rental income but often do not realise they have to pay for an insurance policy to cover this. They also do not understand whose responsibility it is to maintain the property and think they will always get the property back in the same condition as they let it” he continues.

“From the occupier's viewpoint, they do not know they have no relationship with the property owner so when they have problems with repairs they can be left high and dry. The current redress client does not cover tenant and landlord disputes, which essentially the relationship of the R2R and their sub tenant is.

“Reputable R2R providers go to pains to make their terms transparent and fair but too often landlords turn to speculative firms trying to exploit the market and are all too aware of the loopholes they can use to their advantage.”